The company released its semi-annual report for the year 20. Revenue from 2Q20 and net profit after deducting non-return to the mother increased: in the first half of '20, the company achieved revenue of 380 million yuan, a net profit of 23.37 million, a decrease of 1.1%, net profit after deduction of 16.93 million, an increase of 28%; single 2Q20 revenue of 300 million yuan, an increase of 73%, and net profit of 21.45 million yuan, an increase of 39%. The impact of the 2Q20 epidemic was basically eliminated, and the contribution of the Jiangsu base led to a return to a high increase in 2Q20. There is room for improvement in profitability. The turnover of the two gold coins continues to accelerate, and the asset structure is improving: profitability is under pressure. The comprehensive gross profit margin of the 1H20 company was 26.4%, a decrease of 2.3 pcts. Among them, the gross profit margin of the prefabricated construction project business (74.4% of revenue in the reporting period) was 29.2%, a decrease of 4.0 pcts; the combined gross profit margin for 2Q20 was 23.9%, a decrease of 3.6 pcts. Gross margin pressure is estimated mainly due to changes in project structure and the impact of the epidemic. Expense control gradually became effective (the fee rate decreased by 0.9pct to 17.7% year on year during the 1H20 period), and impairment losses decreased (the ratio of impairment losses to revenue decreased by 2.0pcts to 1.8% year on year), but government subsidies declined markedly (the ratio of other income to revenue fell 2.0pcts to 1.4% year on year), causing the company's 1H20 net interest rate to decrease by 1.2pcts to 6.2% (single 2Q20 net profit margin of 7.1%, same decrease of 1.8 pcts, increase of 4.6 pcts). The impact of the epidemic has basically been eliminated. We expect further results from cost and financial controls, and there is room for profitability to improve. The turnover of the two gold coins continues to accelerate, and the asset structure has improved marginally. By the end of 1H20, the company's balance ratio was 47.2%, down 0.2 pct year on year, and the interest-bearing debt ratio was 58.9%, down 4.3 pcts year on year. The turnover days for 1H20 accounts receivable and inventory (including contract assets) were 372 and 136 days respectively, down sharply by 123 and 52 days from the same period last year. The turnover of the two gold coins continued to accelerate. The smooth entry of China Railway greatly broadens the company's growth space and maintains the “increased holdings” rating: China Railway's smooth entry will help further improve asset structure, reduce costs and increase efficiency, and is expected to become a platform for China Railway to expand its prefabricated business. In the future, it may be expected to significantly benefit from asset injection, order collaboration, etc. As one of the important directions for future changes in the construction industry, prefabricated construction is growing in the medium to long term, and the company has broad scope for subsequent development. The company's early name change (name changed from Hengtong Technology to China Railway Assembly) and the change of general manager showed that after China Railway joined the company, internal adjustments were being carried out in an orderly manner to match subsequent changes in the company's business strategy/model. In 2Q20, the company's revenue growth slightly exceeded expectations. The company's net profit forecast for 20-22 was slightly raised to 0.79/ 0.98/128 million (previous value was 0.77/ 0.91/ 114 million). YoY was 17%/25%/30%, respectively. The current price corresponds to PE 63x in 2020, maintaining the “increase in holdings” rating. Risk warning: collaboration with China Railway business falls short of expectations, raw material prices fluctuate greatly, policy risks